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Ebay holiday-quarter revenue up 3.1%, shares jump

Thu, Jan 26, 2017 - 7:55 AM

EBay Inc reported a 3.1 per cent rise in quarterly revenue for the fourth-quarter holiday period, offering signs of improvement at the company's traditional marketplace business and sending shares up more than 8 per cent in extended trading on Wednesday.

PHOTO: REUTERS

[BENGALURU] EBay Inc reported a 3.1 per cent rise in quarterly revenue for the fourth-quarter holiday period, offering signs of improvement at the company's traditional marketplace business and sending shares up more than 8 per cent in extended trading on Wednesday.

EBay, once synonymous with online auctions, has been revamping its platform to help it compete better with bigger e-commerce rival Amazon.com Inc as well as traditional retailers. Fixed-price goods now make up a much larger portion of its listings than previously.

"It is a turnaround process for the company, and there are some decent metrics in there," for the marketplace division, said BGC Partners analyst Colin Gillis. Earnings and revenue for the quarter both were in line with Wall Street expectations.

The company forecast first-quarter adjusted profit of 46 US cents to 48 US cents per share, below analysts' average estimate of 50 US cents, according to Thomson Reuters I/B/E/S.

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A full-year forecast of adjusted profit of US$1.98 to US$2.03 per share missed estimates of US$2.06 per share. But the top end of its forecast of US$9.3 billion to US$9.5 billion in revenue was ahead of the analyst consensus of US$9.36 billion.

EBay also said it had repurchased US$1 billion in shares over the quarter.

"EBay doubled their quarterly rate of share buybacks in Q4, and 2017 revenue guidance implies a re-acceleration of marketplace growth, which indicates the company is confident their structured data initiative can help stem the rate of market share losses," said Wedbush Securities analyst Aaron Turner.

EBay, which spun off its main growth engine PayPal Holdings Inc in 2015, has revamped its platform to offer a bigger selection of products and brands.

The company now also requires sellers to give more details on items to attract younger shoppers and has been cutting listing costs.

Although turning around, the marketplace is "still a laggard", added Mr Gillis, noting that 4 per cent revenue growth for eBay's marketplace, accounting for foreign exchange rate changes, paled in comparison to e-commerce growth at an estimated 15 per cent.

The company said its gross merchandise volume, or the total value of all goods sold on its sites, rose 2.2 per cent to US$22.34 billion in the quarter.

The company's net income rose to US$5.94 billion, or US$5.30 per share, in the fourth quarter ended Dec 31, from US$477 million, or 39 US cents per share, a year earlier.

The boost in net income was driven by a non-cash US$4.6 billion income tax benefit related to a change in legal structure, mostly impacting its international entities.